Members of Australia's monetary policy board believed that the rate of growth for Australia's economy is likely to hold steady for the time being, minutes from the central bank's November 4 meeting revealed on Tuesday.
At the meeting, the RBA left its benchmark cash rate unchanged at a record low 2.50 percent. The rate has been at the current level since August 2013.
"The forces underpinning the outlook for domestic activity were much as they had been for some time and the forecasts had not materially changed; GDP growth was still expected to be below trend over 2014/15, before gradually picking up to an above-trend pace towards the end of 2016," the minutes said.
The board also noted that the labor market remains subdued and is likely to remain that way, although that may help to hold inflation in check despite the weakening of the Australian dollar.
Inflation is running between 2 and 3 percent, and this is set to continue, the bank noted.
Policymakers said the exchange rate has traded at lower levels, largely reflecting the strengthening U.S. dollar, adding that the value of the Australian dollar remains high.
"Despite the recent depreciation of the exchange rate, the Australian dollar remained above most estimates of its fundamental value, particularly given the further declines in key commodity prices over the course of the year to date. As a result, the exchange rate was offering less assistance than would normally be expected in achieving balanced growth in the economy," the minutes said.
The members added that commodity prices are trending lower, although they remain high by historical standards.
Continued accommodative monetary policy should provide support to demand and help growth to strengthen over time. Inflation is expected to be consistent with the 2-3 percent target over the next two years, the bank reiterated.
"The current accommodative stance of monetary policy continued to be appropriate to foster sustainable growth in demand and inflation outcomes consistent with the target over the period ahead. Members considered that the most prudent course was likely to be a period of stability in interest rates," the minutes said.
Also on Tuesday, a leading economic indicator for Australia's economy continued to slow in September, the latest index from the Conference Board revealed - dipping 0.3 percent. That follows the upwardly revised 0.1 percent contraction in August (originally -0.2 percent) and the 0.6 percent spike in July.
The positive contributors to the index were money supply, yield spread, sales to inventories ratio and rural goods exports. Building approvals, share prices and gross operating surplus declined in September.
The coincident index was steady at 0.2 percent for the third straight month. The increases were in retail trade, household gross disposable income and industrial production. Employed persons declined in September.
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